According to independent financial analyst Josh Rager, the Bitcoin bull run is on the verge of encountering a tough wall of resistance.
The benchmark cryptocurrency could fall as much as 30 percent, according to the co-founder of Blockroots. He comments that BTC / USD has a knack for logging extreme retreats after its relentless rallies.
Rager cites nine such cases in recent history in which bull markets brought corrections of at least 30 percent
The bearish analogy comes despite a long-term healthy outlook for the Bitcoin market. The cryptocurrency rose about 90 percent in 2020 and traded as low as $ 14,098 on Friday – its highest level since January 2018, when BTC corrected down from an all-time high of nearly $ 20,000 the previous month.
Many traders, including Rager, agree that Bitcoin hit $ 14,000 because of the general consensus that cryptocurrency was a hedge against inflation. The asset has a limited supply of 21 million coins, which outweighs the potential benefits of owning fiat currencies with an unlimited supply.
The surge in coronavirus cases and its potential impact on the global economy has led central banks to pursue an unprecedented policy of quantitative easing. More money comes into the market, which undermines its purchasing power.
As a result, investors are actively moving their cash reserves into relatively riskier assets, which include stocks, gold, and bitcoin .
That explains the incredible price rally of the crypto currency since March 2020 – up to 265 percent on Friday.
„Let the dips come“
Rager sees the impending bearish correction as a natural response to a bull run. The analyst admits that the „dip“ would prove helpful in attracting more investors to the Bitcoin market. For them it would be an opportunity to secure the tight investment at a discount. Rager bullish:
„In the long term we know where this is going (up)“
Much of this investment is expected to come from traditional firms. Bakkt President Adam White told the Wall Street Journal that hedge funds, brokerage houses and other mainstream trading firms are „taking a hard look at crypto and bitcoin.“ According to White, daily trading on his futures platform has increased from 1,300 in late 2019 to 8,700 in September 2020.
The introduction of Bitcoin also increases the payment services sector.